Updated at 9.34am
FINANCE MINISTER MICHAEL Noonan has played down fears that a new housing initiative being launched by the Government today could fuel another property bubble.
As part of the Construction 2020 scheme, being launched today at Abbotstown by the Taoiseach and the Tánaiste, a portion of mortgages to first-time buyers will be guaranteed by the State. It’s hoped the plan will encourage banks to begin lending more.
“It’s very difficult to envisage a young couple having more than ten per cent of a house as a deposit and at present they’re being required to come up with something like 20 per cent,” Noonan told RTÉ News.
“It would be only for new houses now — not for the second hand market. And it would be for first time buyers, and it would be temporary in nature — so we’re working out the details of it between now and the Finance Bill.”
Asked whether he was concerned it could lead to overly-inflated prices in the sector, Noonan said “we’re a long way from a housing bubble here — we need more houses”.
“You could see it as an assistance to young people who are in apartments who have a deposit and want to move.
Noonan said he hoped the scheme would kick-start the commercial housing sector, adding, “I think, by the autumn there’ll be significant house building in Dublin”.
Speaking to RTÉ’s Morning Ireland, former junior minister Lucinda Creighton was critical of the plan, saying it was “redolent of the sort of announcements that we became used to back in 2002/2003″.
She said that while there were problems with supply of housing, particularly in Dublin “fuelling demand, and essentially pitching first time buyers against each other is not the way to deal with that supply issue”.
“It makes no sense to create further demand,” the Reform Alliance TD said.
The full details of the Construction 2020 scheme will be announced at 1.30pm this afternoon at the National Sports Campus.
First posted at 9am.
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